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Speedway Motorsports, Inc. (NYSE:TRK)

Q2 2008 Earnings Call

August 6, 2008 11:00 am ET

Executives

Lauri Wilks – Executive Vice President of Management and Administration

Marcus G. Smith - President, Chief Operating Officer and Director

William R. Brooks - Vice Chairman of the Board, Chief Financial Officer and Treasurer

Analysts

Bob Simonson – William Blair & Company, L.L.C.

Eugene Fox, III – Cardinal Capital Management

Edward Williams – BMO Capital Markets

[Chris Sim – The Shankman Capital]

Jefferson George – The Charlotte Observer

[Chris Gazzin – Faircourt]

Piwan Malgeri – Wells Fargo

Operator

Welcome everyone to the Speedway Motorsports’ second quarter earnings release conference call. (Operator Instructions)

Lauri Wilks

Eelcome the Speedway Motorsports’ second quarter earnings conference call. We appreciate the fact that you’re on the call this morning. I have with me on the call Marcus Smith who is the Chief Operating Officer of Speedway Motorsports and also Bill Brooks who is our Vice Chairman and Chief Financial Officer of Speedway Motorsports. I’m going to read some Safe Harbor language and then we’ll go ahead with some remarks form Marcus and Bill.

Please note that during this conference we may state some forward-looking statements particularly statements with regard to our future operations and financial results. As you know there be many factors that affect our future events and trends of our business including but not limited to consumer and corporate spending sentiment, air travel, governmental regulations, military actions, national or local catastrophic events, the success of and weather surrounding our events, our relationship with NASCAR and other sanctioning bodies, the success of Motorsports Authentics merchandising joint venture, the success of our expense reduction efforts, capital projects, expansion, economic conditions, stock repurchases, financing needs, insurance, litigation, taxes, oil and gas activities, including the possibility of discontinuing operations, geopolitical situations in foreign countries and other factors that are outside of our management’s control.

These factors and other factors including those contained in our Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q involve certain risks and uncertainties that could cause actual results or events to differ materially from our views expressed here today.

With that out of the way, Marcus, you want to go ahead and update the market?

Marcus G. Smith

We’re very pleased to announce our second quarter 2008 results for Speedway Motorsports. Our six month 2008 results included record total revenues, record net income and record diluted earnings per share. We also reaffirmed our full year 2008 guidance of $2.40 to $2.50 per diluted share and we are very pleased to have those excellent results. Similar to first quarter we continued to see record levels of corporate marketing and other even related revenues for our NASCAR racing event weekends and we hosted several major Sprint Cup Series weekends during the quarter including Texas Motor Speedway where we hosted the Samsung 500 Sprint Cup weekend including the O’Reilly 300 Nationwide Series racing event and including the Bombardier Learjet 550 Indy Car Series in June and the Samsung 400 Craftsman Truck Series race all of which hosted significant crowds at Texas Motor Speedway.

At Lowe’s Motor Speedway we had a significantly higher attendance at the NASCAR Sprint All Star Race and the following weekend at the Memorial Day Classic Coca-Cola 600 and the CARQUEST Auto Parts 300 Nationwide Series race. At our new speedway New Hampshire Motor Speedway we hosted fantastic crowds at the LENOX Industrial Tools 301 NASCAR Sprint Cup Series event and near record attendance for the Camping World 200 event presented by Arbys.com. All the events had fantastic crowds and great weather. We also hosted an event at Sonoma and Infineon Raceway where we were accompanied by great weather and a super crowd at the Toyota/Save Mart 350.

Business trends for the quarter we saw our business model continue to hold strong, our three pillars of media, corporate sales and admissions gave us protection against the rising gas prices, our long term media contracts, long term corporate partner contracts held strong while admissions were slightly off at various areas but because of our diversification in the revenue stream and strong partnerships we were able to remain relatively stable during the downturn because we’re not reliant on one particular of those revenue streams all of which are pretty even.

Television ratings on the media front remained very strong for the first half of the 2008 season and we have continued to be number one or number two rated sport in each week. That obviously shows continued strong interest in the sport, the weekly programming continues to stay strong and actually grow so the total consumption of NASCAR and related things around the sport and drag racing continued to be very strong and give us a wider net to cast to sell tickets and sponsorships and related items.

Our corporate spending as I said remains strong, our long term contracts are stable and we continue to renew long term partnerships this year and into the future. We’ve seen several renewals this year with our long term partners and even some new partners come into the company. All of our 2008 event entitlements are sold and most are sold for 2009 looking into that season and our team is off to a great start for the 2009 selling season and we’ll continue those efforts going in for the rest of this year. On the admissions front we are slightly off in low single digits. We expect those to remain soft in the second half of the year but we also expect our other fillers of the model to continue to stay strong in corporate spending and the media fronts.

In Motorsports Authentics for merchandising we’ve had a significant turn around as you saw in the release. We are pleased with the turn around that our management has put together and we’re very pleased to see that we have significantly more store fronts and shelf space than the sport’s ever seen before and think that will yield positive results for us in the future and the continued media expansion and distribution expansion of the product should yield positive results for us going forward and support the business model.

Looking into the second half of 2008 in the third quarter we’ll host significant events at Bristol with the Sharpie 500 weekend coming up in a few weeks. We expect a fantastic crowd there, it’s always a sell out event. The Bristol night race is known as the hardest ticket in sports. In New Hampshire we’ll host the Sylvania 300 weekend and look forward to going up there again with a crowd that seems very welcoming to our acquisition of that property and we have our grand opening of the ZMax Dragway here at Lowe’s Motor Speedway and are looking forward to hosting a record crowd for the NHRA weekend. In the fourth quarter we’ve got the Bank of America 500 at Lowe’s Motor Speedway, the Pep Boys Auto 500 at Atlanta Motor Speedway and the Dickies 500 weekend at Texas Motor Speedway. All should be tremendous events for those facilities.

To give more light to the financial picture, Bill Brooks if you would take the floor.

William R. Brooks

Ladies and gentlemen we view our second quarter results as very consistent with our expectations and excellent overall given the economy. Although the second quarter 2008 is not directly comparable to the second quarter of 2007 because in the second quarter of 2008 our results include the promotion and running of the NASCAR races at New Hampshire Motor Speedway. They also include in 2008 the results of an NHRA drag event held at Bristol Motor Speedway which was in the third quarter in 2007 and of course Motorsports Authentics reflected much better results than they did a year ago. As you probably know the accounting pronouncements require us to reflect the results of an acquisition in the prior year as opposed to separately disclosing it and carving it out in the current year. So if we look at the effects of the New Hampshire Motor Speedway in the second quarter of 2007 we find that the diluted earnings per share would have increased from $0.92 to $1.02 just to give you some perspective as to the effects of that event on our results.

If we look at the same analysis for the six months ended in 2007 the earnings per share would increase slightly from $1.64 per share to $1.65 per share. Again very consistent with what we expected to happen with the results of that being slightly accretive or break even for the full year.

If we look at admissions it’s pretty obvious that a lot of the increase in admission of $8.9 million over the second quarter 2007 occurred because of the NASCAR races at New Hampshire and the additional race at Bristol Motor Speedway. I would say it was somewhat offset by lowered admissions at our other NASCAR sanctioned events but not dramatically so. Our event related revenues increased by $9 million or 14% over the second quarter of 2007 again primarily because of races held at New Hampshire Motor Speedway and NHRA events at Bristol. It also reflects increases in our sponsorship suite rental and our other NASCAR race revenues which increased. Other operating revenues increased about $1.3 million over the same quarter in 2007 primarily from higher non-event motorsports merchandise sales and 600 racing revenues.

The expense line that really relates to those revenues, the other operating expenses increased about 8.7% over the second quarter of 2007 for the same reasons basically. NASCAR broadcast was up $2.8 million over the second quarter again mostly from the NASCAR events at New Hampshire but also from higher annual contracted race revenues at our other speedways. Similar increases were noted on a percentage basis at our NASCAR purse and sanction fees which went up about 24.9% over the second quarter 2007 again for the same reasons that the NASCAR broadcast revenues increased. Direct expense at events increased about $10.4 million or 35% over the same period as last year partially from the promotion of the NASCAR events at New Hampshire and the drag events at Bristol but also some higher souvenir costs and insurance and some increase from compensation expenses that previously had been reflected in general administrative expenses and we decided those were really more race related than general administrative and they were subsequently reflected at direct expense of events. You can see that by looking at general and administrative expenses which decreased about $107,000 from the same quarter in 2007 and it reflects those event based compensation amounts that were in the direct expense this year offset by the operating costs of New Hampshire Motor Speedway somewhat.

Interest expense increased about $3.5 million over the second quarter of 2007 from increased borrowings associated with the purchase of New Hampshire for the most part and depreciation and amortization likewise increased about $650,000 from the purchase in January of New Hampshire and some other additions at our other speedways. Our other income was positive this year versus a loss last year. The second quarter 2008 had a small gain on some SMI property and in the second quarter I think we had some losses on some property that was disposed in the second quarter of 2007 that is. Our income tax rate for the second quarter is about 39.3%. It was 38% for the similar period in 2007. That basically reflects higher state taxes in New Hampshire because the income tax bases of those two assets are acquired in.

Our balance sheet was very similar to the year end apart from the acquisition of New Hampshire and it was excellent that we were able to reduce our long term debt about $48 million during the quarter.

At this time Stephanie I’d like to allow our participants to ask any questions and encourage them to do so.

Question-And-Answer Session

Operator

(Operator Instructions) Your first question comes from Bob Simonson – William Blair & Company, L.L.C.

Bob Simonson – William Blair & Company, L.L.C.

Couple questions for you, noticeable by its absence there was no comment in the press release or your prepared comments on an update on Kentucky. Will you close on a Kentucky transaction if NASCAR doesn’t allow you to put a race there in the 2009 schedule?

William R. Brooks

Bob, I’m glad that you brought that up. The Kentucky due diligence is ongoing right now and it’s not complete. It will be complete within the period that we indicated back in May and once it is we’re going to make a final decision and we expect to file an 8-K one way or the other by the end of this month. That K should have fairly robust disclosures in it that hopefully answer questions you might have but if there are some others we’ll attempt to answer them. So I can’t answer you definitively whether or not we would go forward with the transaction given NASCAR’s announcement that there wouldn’t be any realignments of dates in 2009. At this juncture the schedule is pretty well set and I don’t think there’ll be any change to that decision about the realignment for 2009 but I don’t have a definitive answer as to how we’re going to proceed today.

Bob Simonson – William Blair & Company, L.L.C.

For Marcus, now that you’re Chief Operating Officer how have you split up your former marketing duties?

Marcus G. Smith

We have a great team with significant experience on the marketing front. In fact we’ve got a sales meeting in Charlotte for the next two or three days here this week and where we’ve been able to continue followed with renewals and expansion of the business going into next year we are nearing completion of the process to select our new head of national sales. But in the meantime we’ve been able to proceed with some success going into next year.

Bob Simonson – William Blair & Company, L.L.C.

Is that an internal and external search for that person?

Marcus G. Smith

We have done a little bit of both and we’ve got such strong internal candidates that the opportunity looks like it’ll be internal but we have continued marching forward with our team as it is now and we add that new person we’ll be able to go forward without a hitch.

Bob Simonson – William Blair & Company, L.L.C.

Another one on possible impact of the Lowe’s NHRA race September 11th, that weekend, any thoughts on how that might influence the third quarter or some guidelines as how many tickets you can sell and what the average ticket price would be, etc.? Is there any TOU associated with it?

William R. Brooks

Bob, the drag race results have been reported historically as a split of profits with NHRA and they are not reflected in a gross manner generally. I take that back. They actually are sales in it and cost of sales associated with it. In the past we didn’t do it that way but we changed recently. To give you some perspective we have 27,000 seats and if we could sell them all for say $50 for each of the four days of the event that would probably be a record for any NHRA ever held. We would certainly like to do that but we don’t expect to do that. For the current year we think worst case that it will be a break even event for the remaining six months of the year but it’ll probably have some positive impact on the third quarter. I’m not sure we are able to quantify what that is right now. The TV is handled by NHRA and that’s part of the split that we have with them.

Bob Simonson – William Blair & Company, L.L.C.

Bill, also on the guidance $2.40 to $2.50, the wording in the press release says it excludes our 50% share of Motorsports Authentics.

William R. Brooks

Yes, that’s correct, Bob.

Bob Simonson – William Blair & Company, L.L.C.

Motorsports Authentics had a heck of a first half. Originally your partners were talking about taking the losses from that last year down to break even but now that seems, unless it falls off a cliff, to be unduly conservative. Can you make $2.40 without any contribution from Motorsports Authentics or the other stuff like oil trading, etc.? Might that offset the profits from Motorsports, is that why you’re sticking with the estimates?

William R. Brooks

There’s a lot of uncertainty in the economic climate right now. This is the first time we’ve promoted an NHRA event and last year, which you may not recall but at night when there’s about Motorsports [inaudible] last six months of their operations. So I’m not at the point of feeling comfortable that we would necessarily expect them to show continuing profits for the next two quarters. I certainly hope so but we could also see some break even on losses as well. It’s just uncertain, so for that reason we’re sticking with our current estimates. Those estimates do not reflect some large write off of MA or some large write off in the oil business or some impairment charge. But those are what we would expect from our basic continuing operations.

Bob Simonson – William Blair & Company, L.L.C.

The core business you can do $2.40 to $2.50?

William R. Brooks

Yes.

Bob Simonson – William Blair & Company, L.L.C.

Can you give us an update on the oil business?

William R. Brooks

I can, it’s really substantially unchanged from when we spoke a few months ago. We have not had any purchase or sale cargos which are the activities that generate the larger losses. We continue to work on the two projects we have in Russia, one where we were actually drilling for some petroleum and another where we were retracting some and pass on about basically claim jumping activity. So far those are progressing satisfactorily, neither of them is in a position where it could be immediately sold in our judgment and it would have to be in that position to be considered a discontinued activity. So the financial impact is outlined in the segment reporting that’s in our 10-Q. We expect to have that filed today and it’s substantially unchanged from the 2007 second quarter.

Bob Simonson – William Blair & Company, L.L.C.

Is there a possibility of an impairment charge there?

William R. Brooks

I guess there’s always that possibility but we don’t know at this point what there is. There does remain about $21 million of assets on the books.

Bob Simonson – William Blair & Company, L.L.C.

How much?

William R. Brooks

$21 million.

Operator

Your next question comes from Eugene Fox, III – Cardinal Capital Management.

Eugene Fox, III – Cardinal Capital Management

The corporate sponsorship environment, there was a lot of press here a few weeks ago with all of GM’s problems that they were going to be spending less money. Marcus could you talk about your relationship with them and the other auto companies and how you see filling any holes that might arise as a result of their decisions in the motorsports business?

Marcus G. Smith

We have some exposure with General Motors, we’ve had long term contracts with GM that we certainly have enjoyed the partnership with them at currently Texas, Atlanta, Bristol and New Hampshire and we’ve received notice that a couple of those facilities that they wish not to renew at the end of the term that expires this year. However, our team got right on the road to sell whether it be the category and/or the assets that they were occupying and we’ve had some success in early indications that we’d be able to do that. And that happens over the year with various categories. For instance we don’t have nearly the same dollars coming in from the motor oil category that we used to many years ago. However the insurance category was nonexistent, cell phone category was nonexistent at the time we were getting all the money from beer, tobacco and motor oil. So we’ll see those various categories we’ll see those various categories come and go and ebb and flow. But feel good about the kind of exposure and the kind of value that not only the sport represents but our facilities and our media offerings represent for companies around the country.

Eugene Fox, III – Cardinal Capital Management

So it sounds like, Marcus, you’re confident that you’ll be able to replace that. Have you seen any of the other auto companies, I haven’t seen anything publicly, do you think any of that business is at risk as well?

Marcus G. Smith

They’re all hurting for sure and we would be big proponents of freeing up some of the oil off the coast to give us some lower gas prices as everybody would benefit from that, but we’ve always been able to fill the gap. So looking at the past to guide us into the future we’ve always been able to fill a gap. We have strong discussions going on now with other manufacturers, domestic and imports and have anticipation we’ll be able to fill those holes.

Eugene Fox, III – Cardinal Capital Management

Marcus, can you talk about how you have been successful in maintaining your attendance at low single digits? There’s been a lot of press about how NASCAR could or would be suffering as a result of higher gas prices?

Marcus G. Smith

I am pleased that we’ve been able to maintain that, just a slight dip as opposed to a dramatic dip, and I think it’s because our facilities are a step above, our markets are places where people want to be and our business model puts the fan first. A race fan is not a casual fan. A race fan has made a lifestyle decision to be a fan and you just don’t stop going to races if you’ve got to spend a little extra on gas or things are tight because you’re a fan. It’s like a Baptist goes to church on Sunday, race fans go to church and a race on Sunday. We have been able to maintain that I think because our facilities are fantastic, our markets are better and our customer service aims to always to delight the customer.

Eugene Fox, III – Cardinal Capital Management

Next question and I’ll try to limit it to a couple more, Motorsports Authentics obviously had a great first half, could you give us a little more color on what they’re doing right or doing differently this year?

Marcus G. Smith

It’s on both ends, it’s cutting costs where they need to be cut and it’s taken tough management and just tough decision making in the face of things to change what was done in the past and it’s come along very well. I think it’s been a long time coming, we’ve got a good team in there to make those tough calls. We’ve had strong support from the stakeholders in the sport to make those changes and that cooperation is key and then on the top end of things our sales team has done a great job of getting into more and more store fronts but we still have a tremendous amount to go on the top end and that’s really the growth story is that if, I know when I go into various retail stores, I don’t see enough of the products out there and there is still plenty of room to grow and I think that’s our growth opportunity going forward. To answer your question it’s been on both ends, they’ve made tough cuts and they’ve done a good job pushing the top line forward.

Eugene Fox, III – Cardinal Capital Management

Bill, if I understood your comments you all had a small gain in the quarter from an asset sale, could you give us a little more color on that?

William R. Brooks

Gene, we always are buying and selling small amounts of land around our speedways and we just had an option on some land that came up, the sale didn’t occur but we recognized the option proceeds.

Eugene Fox, III – Cardinal Capital Management

Could you tell me how much that was, Bill?

William R. Brooks

That was the most of the gain. I think the gain is about $1.3 million and the bulk of it was that.

Eugene Fox, III – Cardinal Capital Management

So it wasn’t all of it, but it was a portion of it?

William R. Brooks

Yes, it was the most significant part.

Operator

Your next question comes from Edward Williams – BMO Capital Markets.

Edward Williams – BMO Capital Markets

Just a couple of questions, first of all Marcus can you talk a little bit about the attendance levels, how they performed with the various sanctioning groups and also on a track basis? Then as a follow up to that can you give us some color as to how New Hampshire performed relative to the year ago number?

Marcus G. Smith

We have had as we mentioned slightly soft attendance at the facilities, some more than others, some close to flat and others down a little bit more. Our NHRA attendance has actually been up this year at most of the events and we’re very pleased with that. Our car counts at smaller events have been very strong. Our Legends Racing in Atlanta and Charlotte have been actually ahead of last year and that’s a very small thing but it speaks to the grassroots core fan out there in racing is still very, very invested in their sport and their hobby. On a race-to-race basis we don’t usually provide that much clarity on those things but I think in general we’ve been strong at those strong events like you’d expect in a Las Vegas, in a Bristol. Those are annually very strong attended events. We were a little softer in Atlanta, we were actually ahead at the All Star race in Charlotte and had strong attendance at the Coca-Cola 600. So we had mixed attendance but generally very positive in light of the economy and what we’re seeing out there comparatively.

William R. Brooks

Ed, some cases an individual would watch our events and they’d say well there doesn’t appear to be quite as many fans as there was in the prior period and the actual physical attendance doesn’t necessarily equate to tickets sold because a lot of times we have promotions with some of our sponsors where the sponsor will buy tickets or it will be part of their agreement and they’ll dispense those to employees or customers or anyone of their own promotions, not all of those people show up. It’s a question of what percentage of them show up. Those type of tickets, the quantity of them is usually somewhat insignificant compared with the total number of tickets but it can explain some year-to-year variances in what appears to be the number of people that show up versus the number of tickets that are sold.

Edward Williams – BMO Capital Markets

Can you just give us the color on New Hampshire since it was not in your year ago? If that’s performing more like Las Vegas or Bristol or more like in Atlanta relative to what they were able to post a year ago?

William R. Brooks

Much more like Las Vegas and Bristol. They’re very similar to the prior year.

Edward Williams – BMO Capital Markets

On the CapEx side, what was the CapEx number for the quarter and what is your expectation for the balance of the year?

William R. Brooks

The quarter was about $24 million that brings us up to about $38 million for the six months and we expect it to be about $70 million to $80 million for the calendar year. Once again probably about the same amount for the second half of the year.

Edward Williams – BMO Capital Markets

How much of that $70 million to $80 million will be maintenance CapEx versus a revenue enhancing CapEx?

William R. Brooks

This year a lot of it is revenue enhancing because a lot of it relates to improved seating at the Lowe’s Motor Speedway and the ZMax Dragway that’s being constructed at the Lowe’s Motor Speedway. I would say a part of the $15 million to $20 million relates more to maintenance type of items.

Operator

Your next question comes from [Chris Sim – The Shankman Capital].

[Chris Sim – The Shankman Capital]

You mentioned the corporate sponsorships and some of the renewals you got this year and some new sponsors. What are you guys seeing on the rates, what you’re charging for those sponsors on a year-over-year basis relatively speaking?

Marcus G. Smith

We’re seeing consistency where we have been able to grow the rates, certainly in a softer time we are more flexible to various negotiations but we’ve seen rates continue to go up slightly. In the speedway business there hasn’t been the same escalation in sponsorship pricing as a team for instance. When you compare an investment in marketing events at our speedways to a team investment or media investments or even in other sports, we still represent a very good value. That gives us a buffer and enables us to continue to raise the rates slightly. However we are sensitive to the economy and don’t want to cut off our nose to spite our face. So when we have good opportunities to extend at modest increases we do that and continue to develop more innovative ways to take our partners’ brands to the marketplace through our facilities and sell more in promotions and merchandising ideas for our sponsor partners. That’s been a solid piece of business for us for the last several years.

[Chris Sim – The Shankman Capital]

I know you break out the sponsorship revenue on the 10-K, can we get that for the quarters, for the year or do you not break that out?

William R. Brooks

Chris we haven’t historically broken that out. In fact I don’t even have it in front of me to tell you what it is. But we will do so at the end of the year. I expect by the end of the year when we look at it we’ll see that the sponsorships are up in the single digits and I think that’s a good [inaudible] given the general economic conditions.

[Chris Sim – The Shankman Capital]

Also what have you been seeing on advance ticket sales and maybe the average ticket prices on those advance ticket sales?

William R. Brooks

The advance ticket sales are running about like our general admissions. People are deferring their purchase when they’re able to do so and fewer are buying in advance. In that case our ticket sales are somewhat weaker than what they were but surprisingly the tickets that sell first are almost always the premium tickets with the higher dollars. I think one of the reasons we don’t see in dollars as much of a decline that some people expected is that the more expensive tickets are the ones that sell the best and first.

[Chris Sim – The Shankman Capital]

Lastly you have a significant draw down on the revolver and I was wondering if you had any plans for refinancing that?

William R. Brooks

That’s a very good question, Chris. There’s 18 months left on that revolver and we’re reviewing whether we’re going to do anything with it in this year or if we’re going to wait to try to renew the revolver next year. It’s very likely that we will try to renew the revolver because it gives us flexibility.

Operator

Your next question is a follow up question from Bob Simonson – William Blair & Company, L.L.C.

Bob Simonson – William Blair & Company, L.L.C.

Again on the attendance stuff did Bristol sell out the spring race? It did it last year, how does it compare with last year?

William R. Brooks

It was lightened down from last year but I want to talk about the number of tickets, it was different by 300 or 500 tickets or something like that and the dollars were actually better than they were in the prior year if I recall correctly. But they had some weather impact as well for their weekend because of the cancellation of Pole day and shortening of the Saturday race but as far as the Sunday event, it’s a virtual sell out in the spring, it’s a virtual sell out for the event coming up in the next couple of weeks, performing very well.

Bob Simonson – William Blair & Company, L.L.C.

Other than the addition of the New Hampshire seats I haven’t modeled any seat number or suite number changes at any of the tracks for this year. Is that still correct?

William R. Brooks

I think that's a good assumption for this year.

Bob Simonson – William Blair & Company, L.L.C.

New Hampshire is the smallest seating track you’ve got. When you purchased it, it was thought at some discussion about the possibility of changing either the configuration, seats, etc. Do you have any plans that you can talk about for CapEx on New Hampshire?

Marcus G. Smith

I think actually in Sonoma we don’t have quite as many seats in Sonoma as do in New Hampshire but we’re developing plans now. We did make some small capital improvements in New Hampshire between the time snow thawed and when we had our first race there and the fans really, really appreciated it and received it well. We had a pre-race breakfast with a number of the fans in the garage area and they were very hospitable and very excited just about the small changes that we made, some fresh paints and some new signage made a big difference there. We’re evaluating what we can do and the windows where construction is possible but as you might guess in the New Hampshire area you’ve got a few months where you can build and the rest you’re under snow. We’re evaluating those things now.

William R. Brooks

We don’t have a final plan yet, Bob.

Operator

Your next question is a follow up question from Eugene Fox, III – Cardinal Capital Management.

Eugene Fox, III – Cardinal Capital Management

Could you, Marcus, give us a little more color on what remains in terms of major sponsorship issues for 2009?

Marcus G. Smith

Our biggest opportunity for 2009 is in Las Vegas where we have our Cup race in the spring available for sponsorship. It is a tremendous event that we’ve actually turned down a couple of folks, we’re looking for the very best partner for us moving into the future there and feel very good about the opportunity that that presents, someone in our team is on that. Our next most visible opportunity would be a Nationwide Series event in Atlanta and we’re working on some extension opportunities for that right now. Other than that, largely the events are sold out. We have a number of various official positions and other unique and new and different marketing elements that we’re working on that will hopefully unveil the new partners attached to them in the future. But they don’t really relate to a particular event

Eugene Fox, III – Cardinal Capital Management

So we should assume all of the other Cup races are essentially sold out as well as the other Nationwide events for 09?

Marcus G. Smith

That is correct. We extended Save Mart in Sonoma for another several years we announced that earlier this year. We announced a couple of other extensions. They’re all sold this year and into the future on everything else except for those two outlined events.

Eugene Fox, III – Cardinal Capital Management

I may not articulate this well but let me try it anyway. With respect to the Kentucky situation, I think investors including myself have had difficulty understanding all of the thought or at least some of the thought surrounding the decision to buy a track without a race date. It’s always been, having been a long term investor it’s never been a good idea to own a track without a date and I guess that from what we can tell in the press there has been the desire and the hope to get a date. I think we’re all sitting back to understand what’s going on and not wanting to negotiate in public and having said what you said, is there any incremental color you can give us in terms of your thought process of entering into negotiations to acquire that facility?

Marcus G. Smith

I understand your concern and some of the things that have yet to be brought to light there but it’s a tremendous facility, the market is fantastic for sports. When you talk about sport fans that area is in a fever over sports, the Ohio Valley and that area. If we are able to get a Cup date at that facility and to acquire it at a good price would give us a very strong facility in a great anchor and what is really more of a Midwest area where we don’t currently have a race and in a unique area of the country for NASCAR that really hasn’t been served and some people say well it’s close to Bristol and Bristol is close to Charlotte, Charlotte is close to other facilities, Atlanta and Talladega, Phoenix and Las Vegas. The sport has grown up around itself and the number of people, there are millions of people around there that can support that facility if it were to have a Cup date there. Our hope is to realign a date to that facility if we’re to close on the transaction and we’ll be able to have a Board discussion on that soon and we’ll certainly have full disclosure when we make that decision. Bill any other color on that? I don’t.

William R. Brooks

Go ahead, Gene. What was your follow up?

Eugene Fox, III – Cardinal Capital Management

Would there be the possibility of taking one of your existing dates and moving it to that facility? Would that be under consideration as well?

Marcus G. Smith

That is a possibility. That is a possibility. It’s one of the potential options that we would have.

Operator

Your next question comes from Jefferson George – The Charlotte Observer.

Jefferson George – The Charlotte Observer

Gentlemen, I know you're trying to wrap things up here, just real quick given the dip in net income in admission revenues we saw in the first quarter can you give me a sense of what the second quarter would have looked like without the New Hampshire races and the drag race at Bristol?

William R. Brooks

Jefferson, if you look at the Form 10-Q we’re going to file the results of New Hampshire putting in last year’s New Hampshire race in 2007 changed the earnings about $0.10 a share, drag races are usually about $0.01 a share. So I think those are reasonable proxies as to their impacts for the current year.

Operator

Your next question comes from [Chris Gazzin – Faircourt].

[Chris Gazzin – Faircourt]

Could you discuss the investment merits at this point of buying back more of our stock at current levels versus making investments in track and facility?

William R. Brooks

Chris, that’s a very good question, it’s a philosophical and pragmatic question and a lot of it depends upon your view as to what’s going to happen going forward. We don’t have a huge float in our shares but we are mindful of dilution and their relative low costs. So we did purchase shares in the quarter. We do have authority to purchase more shares and we are monitoring that every day.

Operator

Your last question comes from Piwan Malgeri – Wells Fargo.

Piwan Malgeri – Wells Fargo

Kind of piggybacking off of Chris’ question there, I see you purchased 4.2 million shares in 2Q, do you think there are going to be more repurchases in 2008 and if so how much and how do you think you’re going to finance that?

William R. Brooks

We expect to finance it out of our operations and we do expect to see some additional share purchases. I can’t tell you the exact magnitude but it wouldn’t surprise me that the number of shares that we purchased in the first half of the year is similar to what we do in the second half of the year. My recollection is about 160,000 shares. We may do more, we may do less. We have authority remaining on about 600,000 shares to be repurchased without additional Board authority.

Operator

At this time there are no further questions.

Lauri Wilks

Thank you all for being on the call and we look forward to talking to you in three more months. Have a great day.

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